Our Next Energy’s planned battery manufacturing expansion in Michigan is being reshaped around a smaller employment commitment, a larger required investment and a broader customer base as the company moves away from its original focus on passenger electric vehicles.
The Michigan Strategic Fund Board approved an amendment on September 22 reducing the state’s Critical Industry Program grant for ONE’s Van Buren Township project from $200 million to $150 million. At the same time, the company’s job commitment was reduced from 2,112 to 1,606 positions, while its required capital investment increased by $47.7 million to approximately $1.67 billion. The amendment also extends the incentive agreement through March 31, 2037, more than six years beyond the original June 2030 end date.
The changes reflect a significant shift from the project Michigan approved in 2022. ONE originally proposed a $1.6 billion battery manufacturing campus capable of scaling to 20 GWh and creating 2,112 jobs. The state approved a $200 million performance based grant as part of a broader $236.6 million support package that also included a $15 million loan and a state essential services assessment exemption valued at $21.6 million.
The revised agreement broadens the eligible manufacturing applications to include lithium ion cells for defense, energy storage, locomotives and other markets. That change is central to ONE’s response to weaker and more volatile demand in the passenger EV market, where smaller battery manufacturers face the additional challenge of securing long term automotive supply contracts.
ONE CEO Mujeeb Ijaz told the Michigan Strategic Fund that the company has redirected its commercial strategy toward defense, rail and utility scale energy storage. The company has reported more than $35 million in new purchase orders from rail and defense customers. Independent reporting earlier this year also identified the same strategic shift, including a substantial workforce reduction and a stated objective of reaching break even during 2026.
The pivot changes the economic logic behind the Michigan project. Instead of relying predominantly on the expansion of passenger EV production, ONE is attempting to use the same battery technology and manufacturing infrastructure across applications with different purchasing cycles and performance requirements. Defense and rail customers can provide alternative demand channels, while grid storage represents a separate market tied to electricity infrastructure rather than vehicle sales.
That diversification, however, does not remove the execution risk surrounding a capital intensive manufacturing project. Michigan records show that ONE had invested approximately $117.6 million against the original $1.6 billion commitment by September 2024, while the company had not yet recorded qualified jobs under the original incentive agreement. The state had disbursed approximately $70.2 million of the original $200 million grant at that point.
The amended structure therefore gives ONE substantially more time to convert its existing operations and new customer relationships into the investment and employment required under the agreement. The ability to count qualifying jobs and investment at the company’s Novi facility toward the commitments also provides additional flexibility as the manufacturing footprint evolves.
The change is significant when measured against the original economics. ONE’s required investment rises from $1.6 billion to roughly $1.67 billion even as its employment obligation falls by 506 positions, a reduction of about 24%. The state grant, meanwhile, falls by $50 million, or 25%.
For Michigan, the amendment reflects a broader challenge in battery manufacturing policy: projects negotiated during the rapid expansion of the EV supply chain are increasingly being tested against a market in which vehicle demand, policy incentives, customer commitments and technology strategies have shifted.
ONE’s original proposal was explicitly tied to automotive electrification. Michigan described the Van Buren Township project in 2022 as the company’s first cell and EV battery pack gigafactory, with plans for raw material refinement, cathode production and cell manufacturing.
The revised agreement instead gives the project a broader industrial role. ONE says its battery technology is already being deployed in more than 100 locomotives across North America and Canada and that it has begun a second production shift at its Van Buren facility. Those claims remain company statements, but they illustrate the commercial rationale for moving into applications where battery systems can be evaluated on fuel savings, operating economics and reliability rather than passenger EV range alone.
The strategy also reflects a wider restructuring of ONE’s position in the battery market. Rather than abandoning its Michigan manufacturing plans after the deterioration of its original EV assumptions, the company is seeking to repurpose the investment around several markets. The amended agreement gives that strategy a longer runway, while lowering the state’s direct grant exposure and reducing the number of jobs required to qualify for the support.
